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Property Taxation

Property taxation

Taxes in Greece are distinguished in taxes on income, taxes on trade and taxes on possession. Real estate has always been a lure for tax administration, on the one hand, because tax evasion and tax evasion is clearly more difficult on that field, and on the other because the possession of real estate is traditionally a safe criterion of taxing ability.

Therefore, the tax treatment of real estate is a decisive factor in deciding whether to invest in real estate or business.

 Real estate combines income tax, possession and transaction taxation issues.

In particular, possession of immovable property (land and buildings) entails the imposition of ENFIA and TAP and other taxes. Indeed, due to legislative changes and other factors pertaining to the administrative organization, errors are often when charging taxes. For example, the rate of primary or supplementary ENFIA is often incorrectly calculated, a tax on non-profitable property is charged etc., for which legal service is necessary due to their economic importance.

In addition, the income from real property is taxed separately, at different rates depending on whether they are owned by a fiscal person (15% up to 45%) or a legal entity (29%). The tax burden is important and tax planning is therefore required in order not to make the exploitation of real estate unprofitable. Especially for legal entities operating real estate for business purposes, a special corporate tax is imposed, which is regulated by a very complex legislative framework and needs specialized treatment as it is annual and with a very high rate (15%).

Finally, the transfer of immovable property is taxed separately by charging the transaction. Thus, we distinguish between inheritance taxes, donations and parental benefits and, on the other hand, taxes on selling.

In relation to the taxation of the transfer of property for free, the affinity of the traders, the value of the property, the personal situation of the donor or heir and the special exemptions (e.g. first-time residence exemption) are relevant, since the tax burden increases considerably depending on the specific conditions. Therefore, it is important to have a qualified lawyer in order to choose the most profitable solution.

In respect of selling real property, either VAT or property transfer tax is charged, depending on the date of issue of the property permit, the systematic or occasional purchase of real estate, the professional activity of the parties and other factors.

Finally, surplus tax on real estate is charged to the seller. This taxation – temporarily suspended-  presents considerable difficulty in its calculation and is expected to constitute a further tax burden on the transfer from 1.1.2019 when it is expected to be implemented. In the light of the tax burden and with appropriate guidance, you can choose the right time for the transfer of real estate.

Important! It is clear that real estate is subject to multiple taxations and requires careful handling. High-quality legal services can guide you through the complex tax framework to take advantage of exemptions at the legislative regime and smartly map your business or your real property exploitation plan.